State Bank of India (NSE: SBIN) Q1 2026 Earnings Call dated Aug. 08, 2025
Corporate Participants:
Pawan Kedia — General Manager, Performance Planning and Review
Challa Sreenivasulu Setty — Chairman
Unidentified Speaker
Ashwini Kumar Tewari — Managing Director, Corporate Banking and Subsidiaries
Saloni Narayan — Deputy Managing Director
Analysts:
Ashok Ajmera — Analyst
Unidentified Participant
Nitin Aggarwal — Analyst
Bhavik Shah — Analyst
Sushil Choksey — Analyst
Jai Prakash Mundhra — Analyst
Piran Engineer — Analyst
Anand Dama — Analyst
Kunal Shah — Analyst
Presentation:
Pawan Kedia — General Manager, Performance Planning and Review
Good evening, ladies and gentlemen. I’m Pawan Kumar, General Manager, Performance Planning and Review Department of the bank. On behalf of State Bank of India, I’m delighted to welcome the analysts, investors, colleagues and everyone present here today on the occasion of the declaration of the quarter one financial year ’26 results of the bank. I also extend a very warm welcome to all the people who are accessing the event through our live webcast.
We have with us on the stage, our Chairman sir, Shri C.S. Setty, at the center; our Managing Director, Corporate Banking and Subsidiaries, Shri Ashwini Kumar Tewari; our Managing Director, Retail Business and Operations, Shri Vinay M. Tonse; our Managing Director, Risk, Compliance and SARG, Shri Rana Ashutosh Kumar Singh; our Managing Director, International Banking, Global Markets and Technology, Shri Rama Mohan Rao Amara; our Deputy Managing Director, Finance, Shrimati Saloni Narayan. Our Deputy Managing Directors heading various verticals and Managing Directors of our subsidiaries are seated in the front rows of this hall. We are also joined by Chief General Managers of different verticals’ business groups.
To carry forward the proceedings, I request our Chairman sir, to give a summary of the bank’s quarter one financial year ’26 performance and the strategic initiatives undertaken. We shall thereafter straight away go to question-and-answer session. However, before I hand over to the Chairman, sir, I would like to read out the safe harbor statement.
Certain statements in today’s presentation may be forward-looking statements. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual outcomes may differ materially from those included in these statements due to a variety of factors. Thank you. Now I would request Chairman sir, to make his opening remarks. Chairman sir, please.
Challa Sreenivasulu Setty — Chairman
It gives me great pleasure to present the results for the first quarter of FY2026, another milestone in State Bank of India’s journey as the nation’s largest and most trusted financial institution. The global macroeconomic environment has remained fluid since June till now amidst geopolitical tensions and tariff policy uncertainties that have increased. Central banks in many advanced economies kept policy rates unchanged as the last mile of disinflation turned out to be stickier than expected, while also awaiting clarity on the trade tariff front and its implications for inflation.
Domestic economic activity held up in June with the high frequency indicators pointing to mixed signals of improving prospects of kharif agricultural season and continuation of strong momentum in the services sector on one hand and deceleration of tax collections, industrial activity and vehicle sales on the other.
RBI estimates GDP for FY’26 at 6.5% and inflation at around 3.1%. The MPC in its latest meeting, as you all are aware, has kept the repo rate unchanged at 5.5% and maintained a neutral stance. We closed the quarter with a 22.17% share of domestic deposits and 19.24% share of system-wide advances, reinforcing our position at the heart of India’s banking system. Even more encouraging, we added 14 basis points of incremental loan market share year-on-year, led primarily by high return on risk-weighted asset segments such as retail mortgages and secure small business credit.
So why are customers choosing us in greater numbers when choice has never been wider. The answer lies in a various virtuous combination of value, brand, reach and fairness. Low to zero fee structures on everyday products, transparent pricing of floating rate loans and the reassurance of our blue-chip balance sheet continue to attract new depositors while deepening existing relationships. Our omnichannel reach with 22,981 branches and 90 million users on our digital platform, YONO, puts the bank in the pocket of customers wherever they are. Above all, we have maintained an uncompromising stance on charging what is fair, never what the market can be pushed to bear. In an era of rising rate volatility, customers recognize and reward that stance.
Second, our performance is powered by people. Attrition remained below 1% during Q1 FY ’26. Banking here is viewed quite literally as a career for life, supported by clear growth path and the sector’s most extensive learning ecosystem. Our ambition is not merely to grow but to grow profitably and sustainably. We reaffirm our structural targets of return on equity above 15% and return on assets of 1% through the cycle. The first quarter delivered an ROE of 19.7% and ROA of 1.14%, underscoring the resilience of our franchise even as funding costs normalize.
Coming to the results for Q1 FY ’26, the net profit for Q1 FY ’26 stands at INR19,160 crores, up by 12.48% year-on-year. At the end of first quarter, our whole bank credit growth was 11.61% year-on-year with the domestic credit growth at 11.06%. Deposit growth at 11.66% year-on-year, while the CD ratio domestic was 68.88%. Operating expenses has decreased by 21.92% during the quarter with containment in overheads, which decreased by 37.98%. Our net NPA ratio has also declined by 10 basis points year-on-year and stands at 0.47%. Slippage ratio has improved by 9 basis points year-on-year and stands at 0.75%. PCR was 74.49%.
The results for Q1 FY’26 demonstrate the bank’s ability to operate profitably at scale due to our substantial core strengths. These advantages stem from our institutionalized framework, which is guided by continuous improvement in processes and a commitment to fairness for all stakeholders, as I mentioned earlier. To keep our bank future-ready and be ahead of the curve in partnering India’s journey of Viksit Bharat and to realize the vision of reimagining the entire gamut of operational processes, preparation of a time-bound road map and facilitating the smooth transformation, an initiative has been launched under SBI’s operations process reengineering project called SARAL.
It is a transformative step to reshape the retail operational processes across the bank. The way SBI serves its customers, enhance employee satisfaction, productivity and resources optimization. The objective of project SARAL is to simplify, automate, centralize and outsource various operational activities of the bank, encompassing retail operations, centralized processing center supporting retail operations, liabilities, third-party relationships and retail loan collections, aided by modern technological tools like AI to improve productivity and resilience while ensuring best-in-class customer service and employee enablement.
Looking ahead, we expect credit expansion to outpace both nominal GDP and industry growth, driven by calibrated exposure to consumption-linked retail loans, government CapEx pipeline and green energy projects. A disciplined risk-adjusted lens on every incremental rupee of credit, combined with our unrivaled low-cost deposit base gives us confidence in maintaining healthy spreads without sacrificing asset quality.
In closing, allow me to reiterate what defines State Bank of India. We combine scale with agility, innovation with prudence and growth with inclusivity. Our dominant market share is the byproduct, not the driver of an operating philosophy that places the customer first, the employee at the center, the shareholder as a partner and the nation as a beneficiary. As we advance into FY2026, we remain steadfast in our promise to deliver superior returns, best-in-class service and uncompromising governance. Together with your continued trust, we will keep creating value for every stakeholder in the SBI ecosystem. My team and I are now open to take your questions. Thank you.
Questions and Answers:
Pawan Kedia
Thank you, Chairman, sir, for the presentation. We now invite questions from the audience. For the benefit of all, we request you to kindly mention your name and company before asking the questions. To accommodate all the questions, we request you to restrict your questions to maximum two at a time.
Also, kindly restrict your questions to the financial results only. And no questions be asked about specific accounts, please. In case you have additional questions, the same can be asked at the end. We now proceed with the question-and-answer session, please.
Ashok Ajmera
Thank you. Sir, this is Ashok Ajmera, Chairman Ajcon Global. Sir, the main silver lining in these results is maintaining or improving the net profit in spite of a very difficult quarter overall for all the banks, where it has gone up substantially. And the overall group profit also has gone to INR21,201 crores as against INR19,325 crores in the last quarter, which is commendable. It means all other group companies are also contributing something to the profits of the bank.
Having said that, sir, we had a sanctioned pipeline of, I think, INR3.4 lakh crores as per the last figure given. But in this quarter, we have grown only by 0.80% in the credit. So while I understand that, yes, there was a slackness, transfers, this, but still could we not have done a little better on the credit front with this kind of sanctioned pipeline, are we reviewing those conditions of sanctions that people are not in a position to adhere to or fulfill those conditions? Or they actually don’t want to draw the money? So this is — I’m not talking about the fresh sanctions.
Another point, sir, is on the fresh slippages, which has gone up to INR7,945 crores as against INR4,222 crores. And that is why affecting our gross NPA, net NPA, I mean, all other numbers also in this quarter, a bit negative, making them a little negative. And of course, finally, the other income dropped by substantial almost about INR6,500 crores, INR6,700 crores, though offsetted by reduced operating expenses also by about INR6,500 crores to INR7,000 crores. So what are the major factors in both the other income coming down. And at the same time, the expenditure also substantial coming down. I see one item, sir, in the miscellaneous income, other income as a miscellaneous income, which has gone down to INR1,711 crores as against INR4,575 crores.
And similarly, in the expenses also, miscellaneous expenses, which have come down to INR1,711 crores as against INR4,575 crores. So these are the — and ultimately resulted in a little lower NIM. I mean, below 3% now 2.9%. So sir, your view on that. And again, any fresh guidance for the overall FY ’26 on all these major parameters, credit deposit and the business growth also. If you can add a little bit of cover in the recovery from written-off account because our recovery otherwise also in this quarter from the main NPA account is also a little lower. So these are a few — treasury, of course, must be doing well, contributing but have not contributed as much as we were expecting in the profitability of the bank.
And last one, if you can just give a little color on that buffer provision of I think about INR30,000 crores, INR31,000 crores which we had. Have you used anything out of that in this quarter? These are the few questions in this round, sir.
Challa Sreenivasulu Setty
Thank you, Ajmera, for your compliments. But after your questions, nothing is left for the other analysts to ask. I think you broadly covered every question. But I’ll try to answer a few and then leave something for the others also to ask, okay?
I think fundamentally, you are coming from quarter-to-quarter. The ideal way is to look at year-on-year because this quarter-on-quarter comparison, particularly from Q4 to Q1 is not — it doesn’t give any indication because Q4 generally is a good quarter across the bank and SBI is no exception to that, particularly the items which you mentioned in terms of miscellaneous income, other income, recovery, almost all these elements show uptick in the Q4.
I think ideal way is to compare with the Q1. But still, your question in relation to the credit growth quarter-on-quarter being low, I would like to answer that question. But if you see most of the segments in the retails, we have done well. Barring Xpress Credit, we could have done better, but we hope to do well going forward in the Xpress Credit. But home loans, we have done extremely well, 15% growth rate year-on-year. And overall, as a quarter also, we have done on this segment. What has been the challenges on the corporate credit side.
It is not in terms of what you said whether terms are being renegotiated. We have not seen that. But what we have seen is that a lot of prepayment has happened in any declining interest rate cycle, particularly on the loans which are fully disbursed. One or two years old, the cash flows have stabilized, everybody wants to refinance and negotiate for repricing. There, some of the exposures we let go. We almost had around INR12,000 crores prepayments because we did not want to go to that level of pricing considering the risk pricing in view.
So around INR12,000 crores is something what impacted the corporate in the current quarter by way of prepayments. We also had a large — a few large corporates accessing the CP market because CP rates have become extremely competitive, and we wouldn’t have offered to give that rates. So that also led to almost INR16,000 crores to INR18,000 crores movement towards CP market by the corporates.
So this is, in my view, is a recurring phenomenon whenever the rates of interest are on the downward movement. So pipeline, yes, we have — still have a robust pipeline. We almost have INR7.2 lakh crore pipeline, both on the sanctions but not disbursed as well as proposals in pipeline, which gives us confidence that we will be able to get back to a double-digit corporate credit growth in the next quarter onwards.
Slippages, again, the comparison should be with the Q1 of the previous year. If you see that, I think very marginal movement. But let me also assure you that there is no concern on the asset quality in any of the segments we have not seen. And even among those slippages, which we have witnessed in the Q1, as it happens every Q1, there has been a significant pullback as we speak in the last 30 or 45 days. So there’s no great concern on the slippages in any of the sector.
Recovery, yes, we had given a guidance of around INR7,000 crores to INR8,000 crores in recovery from AUCA, which means that INR2,000 crores every quarter, but it is not uniformly distributed. Again, you see by Q1 of previous year, it is almost similar to what we have had now. But we are confident that we will be able to achieve the guidance what we have given on the recovery front. And the buffer provision, we have not touched the buffer provision at all. And were there other questions. What?
Full back. Full Bank I have already mentioned around INR1,300 crores to INR1,400 crores. Miscellaneous income, again, in Q4, Ajmera, again, you mentioned Q4 comparison, Q4, we have a lot of miscellaneous income coming by way of inspection charges — locker will come in the — inspection charges, folio charges. There are so many miscellaneous income, which is recovered at the year-end, which is not available in the Q1. Anything else which I missed out?
Ashok Ajmera
[Technical Issues] in the SMA numbers also.
Challa Sreenivasulu Setty
No, no, SMA numbers also have moderated. That is only, I think, again, you have to see Q1 comparison. There’s no untoward develop. Yeah.
Ashok Ajmera
And treasury — we are not getting much profit in the treasury. I mean, we could have offsetted or increased the operating profit, I mean, instead of decrease in this quarter…
Challa Sreenivasulu Setty
No, again, Q4, you are comparing, a very marginal decline, but I think you requested to…
Ashok Ajmera
But sir, what happens, sir, a lot of water gets flown. In the last quarter, in this quarter, our figures, numbers, base, everything changes.
Challa Sreenivasulu Setty
Yes.
Ashok Ajmera
So we cannot also at the same time, compare with the Q1 of the last year.
Challa Sreenivasulu Setty
No, there are variations — no, no, I just would like you to request to Q1 because there are variations in income booking and expenditure booking. There’s a lot of expenditure gets booked.
Ashok Ajmera
So what I actually wanted is nothing unusual or nothing one-off or nothing of that kind.
Challa Sreenivasulu Setty
No.
Unidentified Speaker
So just one point I will add, sir, with your permit. Treasury, even if you compare the Q4, I think in the area of profit earned on account of sale of securities, we are more or less the same in Q4. But only in terms of ForEx, we always say it’s a combination of trading income versus the derivative MTM movement. So this quarter, we did not experience the same positive movement as the Q4, so which is beyond the bank’s control as well, the market factor movement. So that’s the only reason. Otherwise, the core income is continuing to contribute.
Ashok Ajmera
All right. Thank you.
Unidentified Participant
Hello sir. Hi congratulations. Sir, I had a couple of questions. Firstly, on Xpress Credit. Sir, it’s not been growing, and we have a lot of government employees. So they should not be really affected by the macro movements. Plus we also have a lot of repeat business in Xpress Credit. So why have people stopped taking that repeat business? It appears to be the case, right, that even the repeat business would have been lower because Xpress Credit has not grown for a few quarters. So why have people stopped taking repeat business on Xpress Credit as well? So that’s my first question.
And second is, what is the margin outlook from here on? Basically, they’ve declined 10 basis points. That’s possibly a little better than expected — than what we had expected. But how does it pan out from here?
Challa Sreenivasulu Setty
Thank you. Xpress Credit we have had some systemic improvements when we saw that some of the low net monthly income group, even among the government employees, which are predominantly our customer base, we have seen some overleverage happening there. So such segments have been — temporarily, we have had relook at it. That is in the last year. In the Q1, we have seen that NMI, EMI profile of our customers, even at the lower end of the income segment has improved. So we are again reactivating some of these segments, which we have not considered earlier to be brought back.
So you’re right, I think Xpress Credit is basically a rollover product, where people take close and then take. And some of — many a times, their income levels also go up and they take more loan. So that is happening. Otherwise, the portfolio would not have remained at INR3.5 lakh crores. And the amount of repayment which happens every quarter is phenomenal in this because this — while it is given for six to seven years, the average tenure of the loan is two to three years only. That means faster repayment happens here.
With these improvements, we also have — what we have done is we completely reoriented the process. In the last quarter also, I did mention that we have made it completely a digital process. And this also had taken some time to stabilize. People still have to come to the branch and sign the paper because in some of the areas, digital documentation has not been rolled out. But we are seeing a good comeback in the current quarter.
Q1 was slightly disappointing for us also. We have expected the growth to come back. In fact, I said that we may reach double-digit growth in Xpress Credit. It is taking a slightly longer time to get back to that growth rate. But in this quarter, I’m seeing a good development there in Xpress Credit. And there are also some practical difficulties. For example, in the defense area, is our major segment of customers. During this disturbances, many of these defense areas were not available for access, neither they could come to the branch or branch people could not go. That also had some impact. I’m not saying it’s a major impact, but all of them have collectively have resulted in lower growth in Q1 than what we anticipated. But I’m seeing a good growth coming back there.
As far as margin outlook, we are still standing by our 3% guidance on NIM. As I mentioned earlier, I think the NIM trajectory will be U-shaped. It probably will come down in Q2. While we are not hazarding a guess how much it will come down, but I think it will definitely improve from Q3 to Q4 for two, three reasons. One is the deposits get repriced, predominantly the fixed deposits get repriced. We will also have the full benefit of savings bank account rate reduction and the CRR yield — I mean, NIM contribution, which will come from the CRR cut. So we are sticking to our 3% guidance. Thank you.
Unidentified Participant
Excellent response to QIP, great management and a very good fair price also. It’s really phenomenal the way every member or the Board managed. You got a good price, phenomenal response, largest QIP ever over INR1 lakh crores so hats off to you and good numbers. Now a couple of things — and also good numbers, quarterly numbers, credit growth, NII, ROE of 19.7%, good results by the funds business and insurance business, they have given a boost.
A couple of things come to the mind on particularly questions where you can update us. One is the Slide number 23. Now what we see, a little number we can see with little skepticism that 7.88% growth in operating expenses, which is very good and which gives us a cost-to-income ratio of below 0.5%. Now when we go on identifying the items, now below 8% is a little skeptical, that’s what I said. Would like to know on an annual run rate basis, what can we expect? Of course, the size of business will also grow. So can we expect the cost to income at 4.9% or below? So the ground level numbers you would know.
Second question is, there’s a huge challenging uncertainty, which you addressed in the press conference also. Now this has resulted in temporary supply chain disruption in trade manufacturers who are dependent to a good extent on exports, whether in India and abroad. Now the supply chain disruptions, cancellation of orders, maybe even a $1 billion order cancellation by the Walmarts and the like can disrupt and have a spiraling impact on the business, working capital, receivables, inventory and the spiraling is more worrisome to all of us.
Now being a premier bank would like to know at the ground level, you would be knowing last few days the cancellation of orders. So shipments getting held up, and that can have a huge impact. Maybe disruption could be a few months. Would you like to share whether we need to worry about it or the ground level PMI numbers and growth numbers seem apparently good. And how do we look at it on a sustainable basis?
Challa Sreenivasulu Setty
Thank you. First of all, I was waiting for someone to complement on the QIP. So show the QIP slide, I’ll just spend some — a couple of minutes. Of course, it’s well known what we have spoken widely about that, but I must thank all of you for the confidence which you have. I think some of you have definitely helped us to reach out to the investors. Even if some of you have become part of the deal, some of you have not become part of the deal. But your engagement with SBI and your engagement to help us to reach out to the investors, I must acknowledge through this forum for those people who are present here and also on the call. I think I must — I must thank and also maybe I’ll request my team to acknowledge by way of an applause for all the investors.
So it’s not only, I think, the largest QIP ever or largest equity issuance. But what was heartening that more than 60% of the investors are cross-border investors, foreign investors who had bid for that, and we were happy to see some of the investors for the first time looking at our stock, which shows the confidence in the institution and also the confidence in Indian economy. So that’s one. The other one is in terms of cost-to-income ratio, I think what you have observed is right. I think these historically low operating expenses year-on-year are difficult to replicate. There could be some increase in the operating expenses going forward. But in the Q4, there have been some front loading of the expenses.
That also is one of the reasons why you see a lesser growth in the operating expenses. But our effort, what I mentioned in my speech also, the project SARAL, what we keep talking about is aimed at increasing the productivity. While we still are sticking to our guidance that the cost-to-income ratio, our effort is to keep below 50%. I’m not giving any number, whether it’s 47%, 45%. The effort is through the cycle, we would like to maintain the cost-to-income ratio below 50%. I think that is something what I wanted to convey.
As far as supply chain disruption and the tariff order, I think I did mention in my press conference, and I would like to reiterate, there are two elements of this tariff narrative. One is the direct impact on the sectors. There are four, five sectors we’re all familiar of, which probably have more impact. But these sectors from a banking system perspective, do not pose any systemic risk because they are not very large exposures on this sector. Definitely for SBI, very, very minor exposures on these sectors, number one. So you do not worry about the institutional credit quality point of view.
But from a larger perspective, I think more than the direct impact, the uncertainty surrounding the tariffs, both in terms of the investment decision, in terms of the trade disruptions, offtake is something what we should have — definitely, we have a concern. And I’m sure the government of India is working very hard to ensure that the issue of tariff-related negotiations are concluded at the earliest and the clarity emerges there while keeping the nation’s interest paramount. I think we fully respect and support that approach.
And from the ground level, we do hear anecdotally that there are some people who want the shipments to be held on, but we have not heard so much to cause concern at this juncture. So this is what I can respond immediately, but let us wait and watch how it is going to evolve. Thank you.
Unidentified Participant
Sir, second thing is on the monetization of assets, particularly Yes Bank, which we always discuss as intrinsically higher value. Now once part of a deal was signed for a small portion, not a full portion, now that portion, the money doesn’t come for a long time. Then the price announced INR21.5, doesn’t it become — and the market has also gone up significantly. Should not we expect upward revision in the price clearly?
Challa Sreenivasulu Setty
These are binding offers.
Unidentified Participant
But the time of the payment is also important.
Challa Sreenivasulu Setty
No, no, no. The binding offer is valid for a certain period of time. That period is not elapsed.
Unidentified Participant
Okay. Okay. So it will remain. Maybe the next tranche would be higher price.
Challa Sreenivasulu Setty
No, next tranche has no control — I mean, no limitations on our either pricing ability or the — when do we exit, there are no such restrictions. So we are free to look at that opportunity.
Unidentified Participant
Sir, another compliment to you. Your bank is doing well in the case of large fraud accounts and maintaining your highest level of ethics and follow-up action. Whoever is a borrower, large accounts, you have done well on fraud accounts. Keep it up. We are all behind you. Hope you get some recoveries. All the best.
Nitin Aggarwal
Hi sir. Yeah, hi sir, this is Nitin Aggarwal from Motilal.
Challa Sreenivasulu Setty
Yeah.
Nitin Aggarwal
So one question around asset quality. While you indicated that things are all going good and there is no risk lurking around. But given how the credit environment is shaping up, and we are seeing very high delinquencies in unsecured segment with many other lenders, do you see any risk of spillover of the same to SME, MSME, which traditionally have been more vulnerable segments?
Challa Sreenivasulu Setty
Unsecured personal loan — see, in our SME book, barring the micro loans, which are essentially below INR20 lakhs, the government-oriented schemes and all, most of the lending either is a secured lending or it is backed by the CGTMSE guarantee. From that angle, I think we need to say that we are well protected there. But in terms of the asset quality, we have not seen any great concern on the SME book so far. And the underwriting of SME also has improved tremendously. As I mentioned last time also, the business rule engine, which we have adopted.
Now we almost have crossed more than INR65,000 crores worth loans which are processed using the business rule engine, where the data sets are much more robust. We have GST data, income tax data, our own account statement. So we are able to — and historical default data, and we were able to develop a rule engine where the assessment, in my view, and underwriting has tremendously improved. And so while SME definitely is more vulnerable than any other segment, but we are confident that the kind of loans which we are underwriting today may not pose any major problems. As far as unsecured personal loans is concerned, as we keep saying, our Xpress credit is more secured than the secured.
Nitin Aggarwal
Right, sir. And sir, the other observation is around the cost of deposits. So we have reported a small rise in cost of deposits this quarter, while we have seen like stagnation or improvement by many other banks. So how to look into it? Are we expecting this to inch up further before it stabilizes and come down? And therefore, the margins outlook? Any color like when we’ll see the bottom, 2Q or can it like get delayed to 3Q also?
Challa Sreenivasulu Setty
I think the cost of funds uptick is essentially a significant movement towards fixed deposits. If you see our FD growth rate is almost 14% and very large FD book at that. But some of the rate cuts on the fixed deposit, what we have done, we will get the benefit in the quarters going forward. And the fixed deposit book also will get repriced in — predominantly in the next eight to 12 months. Every month, of course, there is a repricing which happens on maturity. So — and the reduction in CASA year-on-year also and particularly from Q4 to Q1, that also has impacted the cost of deposits. But I’m sure that I think it will moderate.
Nitin Aggarwal
Right, sir. And sir, lastly, on the ROA, wherein you have suggested to maintain ROA above 1%. Now this quarter, we are at 1.14%. While, of course, it has come in on the back of significant treasury gains. But does this imply that the 2H ROA will be lower than 1H?
Challa Sreenivasulu Setty
2H will be lower than 1H, I think some — there will be some contribution coming from the CRR cut and many other things which are in the offering, right? That will also improve the earnings. NIM will be improved and ultimately — yeah, some movement — some impact will be seen if the treasury gains are not as robust as we are today. But I believe that — that’s the reason our guidance is 1% and above. We are not giving what level of above that 1%, but we are sticking to our 1% guidance on the ROA.
Nitin Aggarwal
Thank you, sir. And wish you all the best.
Bhavik Shah
Hi sir. This is Bhavik from InCred Capital.
Challa Sreenivasulu Setty
Yeah.
Bhavik Shah
Yeah. Sir, as you rightly started, there’s a lot of pricing competition on corporate and NBFC loans. So we have cut SA rates. We have cut term deposit rates almost by 65, 70 basis points. Sir, do you incrementally take the lead and plan to cut term deposit rates further?
Challa Sreenivasulu Setty
We will see. I think how it is playing out, it’s not appropriate to comment at this juncture. But we will look at — see, earlier also, I mentioned that deposit for us is a franchise activity. And as I mentioned in my inaugural remarks, though it sounded a little philosophical, I think we want to take care of all our constituents. So we never want to shortchange our depositors, and we want to provide — and we have a large base of savers, right, and also senior citizens. So we need to take care. So while I’m not ruling out, but I think we will be mindful of those elements also while — before we take the rate cut on the deposits.
Bhavik Shah
Okay. And sir, two more questions. So one, as in your — so the interest earned is split into three, four buckets. So interest on what we have earned on RBI and interbank borrowings, that has kind of gone up from INR1,000 crores to INR1,800 crores.
Challa Sreenivasulu Setty
Which item is that?
Bhavik Shah
It’s within the interest earned.
Challa Sreenivasulu Setty
Which is earned, yeah.
Bhavik Shah
Yeah. And similarly, we have seen a sharp drop in the interest expense. Again, that is from whatever we pay to interbank and RBI. What kind of operations were there? As in any color would be helpful.
Challa Sreenivasulu Setty
We don’t give that kind of granular data. See, both our borrowing — market borrowing and market lending are depending on the liquidity management. I think it’s not in terms of supporting any credit growth. We don’t borrow to support the credit growth. It is essentially the liquidity operations. So not any great variation in that. But the cost will come down because most of the TREPS and CROMS rate and — have significantly come down there.
Bhavik Shah
Okay. Okay. And sir, last question, sir, NSE stake, what methodology we use to value that?
Challa Sreenivasulu Setty
Which one?
Bhavik Shah
The stake in NSE Limited.
Challa Sreenivasulu Setty
NSE.
Bhavik Shah
What is the methodology we use to…
Challa Sreenivasulu Setty
But is it not — is it appropriate to talk about an individual investment on that? When the NSE gets listed, you will come to know what methodology we are adopting.
Bhavik Shah
Okay, sir. Okay. I just wanted to understand what value…
Challa Sreenivasulu Setty
No, no, I think that’s not appropriate. And where will we stop.
Sushil Choksey
Sir, Sushil Choksey, Indus Equity.
Challa Sreenivasulu Setty
Yeah, Sushil ji.
Sushil Choksey
Sir, congratulations on a very successful QIP. First question is your press meet, you did indicate that you have INR7 lakh crores of pipeline sanctioned and what is visible to you or which is under assessment. Seeing the current condition led by U.S. tariff, global challenges, India may accelerate domestic development of infrastructure or other schemes led by the central government or state government, keeping in view that our negotiations don’t go through.
Do we sense that government has already started about roads in the press, but power plants are happening because of demand led by data center or various other factors, including manufacturing, PLI scheme. So a lot of manufacturing is coming in India and domestic consumption is also increasing. Any sense on this infrastructure spend would show a different color starting second half?
Challa Sreenivasulu Setty
I’ll just give some brief and then I’ll ask Mr. Tewari to supplement me. See, the government capital expenditure, there’s a good visibility of government capital expenditure. But I think to the extent what they have committed so far, we’ll have to see as we progress, whether they are going to further enhance that INR11.5 lakh crore commitment what they have given on the capital expenditure front.
As far as infrastructure is concerned, we are seeing good inquiries on the infrastructure. In fact, some of the power-related other than the simple renewable energy like solar, wind, we are also seeing the green hydrogen and many other new emerging areas people are discussing with us. We are looking at those opportunities also. But as far as the pipeline is concerned, I’ll ask Mr. Tewari to supplement.
Ashwini Kumar Tewari
So to your specific point, whether in response to the uncertainty by tariffs, is there a government plan to speed up or enhance the investments? I think we have not seen that. It’s too early. I think they were still finalizing what they want to do. But as rightly pointed out by Chairman, that INR11.5 lakh crores plus the inquiries we are having in terms of not only the power on the renewable side, etc., but also thermal because clearly, the baseload issue hasn’t gone away.
And that is why the power sector is a big place where a lot of investment is planned and also already sanctioned, and these will be disbursed. So there’s no question of these not being disbursed and all. Similarly, in other areas, for example, the commercial real estate, both for the malls and the real commercial LRD kind of loans and also residential on the premium side. This, again, is seeing a lot of uptick. Mumbai City itself has so many inquiries for the slum redevelopment schemes and other similar activities. So we are seeing good opportunities there. It’s still — a lot of this is in planning stage, discussion stage, etc., etc. The very large redevelopment, which is happening near the airport. You are aware of that. So all of this is happening.
Having said this, there are some players who are kind of putting things on hold or which they have planned earlier and maybe wanting to know more in certain sectors and some are seeing more consolidation. Cement, for example, is seeing more consolidation steel again, there are some plans, but again, they are colored by some developments, which you are aware of. So therefore, it’s overall a slightly mixed picture. But as rightly said by Chairman, that overall, we still think that we might have this year at — still at around 10%, 11% in corporate growth. Right now, it seems very, very low. But ultimately, I think the kind of project pipeline we have, and we are the strongest player in the project finance space. So we do hope that 10%, 11% is what we will end up achieving. Thank you.
Sushil Choksey
Sir, most of the banks in RAM sector have shown 17%, 18% growth. Do you think the second half, specifically after the festive season or starting the festive that RAM will get accelerated? Or do you think the numbers are at peak?
Challa Sreenivasulu Setty
In our book, I think home loans, we have done 15% on a base of INR8 lakh crores, I think that’s a phenomenal growth. But I definitely visualize that the unsecured personal loan segment and auto loan segment. Auto is not all that doing well in terms of the sales, and it’s also getting reflected in the auto loan segment. These two will pick up in the second half. That is what our assumption. And that will have some spin-off effect on the SME also. SME, my view is that 19% to 21% growth rate is very robust. I don’t think it will further get into a higher mode. Even if we are growing at 19% to 20% is a good growth rate to have.
Sushil Choksey
Sir, second is you are enabling with a lot of initiatives with digitization processes. So I’m sure you are doing an accelerated development, whether new products or AI or transformation journey in the current phase. So will your digital expenditure substantially increase or the stable number would continue?
Challa Sreenivasulu Setty
No, we’ve been investing in technology and digitalization significantly. And many of these initiatives, what we spoke about are not very costly events. It’s not that we have to spend a lot. It’s more in terms of the reengineering. That means you look at the process and see what are those redundant steps, which we have not looked at for quite some time. And another element is, if you really ask me what would be the major investment coming forward would be a buildup of our own AI stack, which we are undertaking. But that doesn’t require any great amount of capital expenditure.
Sushil Choksey
Second thing, sir, any plans on listing of any of your other subsidiaries?
Challa Sreenivasulu Setty
No. As we mentioned that we definitely have a couple of candidates for listing, but the timing is not very — there’s no sense of urgency there, I believe. And you all have helped us to raise INR25,000 crores now.
Sushil Choksey
No, I think the markets are in good shape despite the global challenges. The only thing is the right choice because you started with ARCIL an offer for sale a little bit, but there will be multiple other things…
Challa Sreenivasulu Setty
There are a lot of things which we have been participant, ARCIL, NSDL and so wherever opportunities are there, we will definitely look at it.
Sushil Choksey
Thank you for answering all my questions. Good luck for the year.
Jai Prakash Mundhra
Yeah. Hi sir. This is Jai Mundhra from ICICI Securities. Sir, first, on your margins, you said 3% for the full year. This is global or domestic?
Challa Sreenivasulu Setty
Domestic.
Jai Prakash Mundhra
Okay, sure. And secondly, sir, if you can call out the amount of bulk deposit that we have, that probably will reprice at a much faster pace. If you have that number, how much is that?
Challa Sreenivasulu Setty
We do not disclose.
Jai Prakash Mundhra
Sure. Secondly, sir, on SME, right? So we have been doing very well for the last nine, 10 quarters, 15%-plus growth on a consistent basis. Would you have any visibility on the self-funding ratio? So usually, a lot of other banks, when they go reasonably well in SME, I mean, they get to own the float also in that business because these typically may have only one or at max two banks. would you have some visibility that what is the kind of self-funding that we are getting from these SME pool now?
Challa Sreenivasulu Setty
See, most of these SME loans are sole banking loans. Very few have consortium arrangement, which means that the whole cash flow is routed through our cash credit account. If that is what you are looking at, yes, we have a good visibility of the cash flow. And we actually insist that the whole cash has to be routed through us, and that is one of the peak conditions.
Jai Prakash Mundhra
And just sir, breakup only, if you have the slippages breakup for this quarter, especially in agri and retail and maybe Xpress Credit.
Challa Sreenivasulu Setty
Do you have that?
Unidentified Speaker
Yeah.
Jai Prakash Mundhra
And sir, our other retail, right? So Xpress Credit and then other retail, just ballpark, I mean, what are the key products there apart from home loan, auto loan and gold loan, there is some other…
Challa Sreenivasulu Setty
Yeah, other key segment loans are educational loans mainly. And pension loans, we also have pension loans and loan against fixed deposits. That’s also a very popular product in our book.
Jai Prakash Mundhra
Sir, if you have the quantum there — or the LAP, sir, do you do LAP or…?
Challa Sreenivasulu Setty
We don’t do much LAP. We do LAP, but not very significant. But even if it is there, it will appear in the home loans category.
Jai Prakash Mundhra
Sure, sir. During the — I mean, time, if you can just quantify the number of education.
Challa Sreenivasulu Setty
That’s not a big number anyway.
Jai Prakash Mundhra
Education, loan against…
Challa Sreenivasulu Setty
We will be able to give the breakup. There’s absolutely no problem.
Saloni Narayan
Sir, can I respond to the slippages part, sir?
Challa Sreenivasulu Setty
Yeah.
Saloni Narayan
So in SME, the slippage is INR2,680 crores. SME is INR2,680 crores. Agriculture is INR2,464. Personal is INR2,602 crores. Total is INR7,746 crores, and there is some small slippage in CCG, INR196 crores. The total is INR7,942 crores, out of which INR1,585 crores has already been pulled back.
Jai Prakash Mundhra
Thank you sir. All the best.
Piran Engineer
Yeah, hi. Hi this is Piran Engineer from CLSA. Sir, just a couple of questions. Firstly, on the power sector, we are seeing that NBFCs are growing faster than banks last few years since this power sector CapEx has taken up and as our book is flat Y-o-Y. Can you just give us some commentary of why this is happening? Are the risks still high in this segment? Because the yields are pretty good, north of 10%. Why aren’t banks participating in this business?
Challa Sreenivasulu Setty
I don’t think there is any — we are extremely oriented towards the renewable energy, which is coming up, even on the thermal capacity addition, which is happening, I think SBI is there. But some of the NBFCs, what you are mentioning are focused on some of these renewables, for example. So obviously, their book will be much larger than what bank books are. So the three NBFCs, what we all know are actively involved because their mandate is to finance the power sector. So obviously, their book will be always larger. And they’re also diversifying their book from the conventional DISCOM and GENCO funding to renewable financing in the private space. That is where you see the growth coming for them. But we are not staying away. We are very actively involved in this space.
Piran Engineer
Sir, but then our growth is like 1% Y-o-Y.
Challa Sreenivasulu Setty
No, this — see, the challenge in the renewable is the typical short-term execution there. Execution is just less than 12 months. The moment the project is up and running, either they will go for refinancing or most of them are moving into InvITs also. So that gets refinanced and the churning happens faster in the renewable space.
Piran Engineer
Understood, thank you. And sir, secondly, when we talk about our NIM trajectory and aspiration to reach the exit FY’26 NIM at par with exit FY’25, what assumptions are we making on like further — I think someone asked this question on further rate cuts. Are we assuming that we’ll cut rates further to reach that NIM? Or is it simply just repricing of term deposits, which will help us get there? And are we assuming CASA ratios to also decline like they have been declining for the banking sector?
Challa Sreenivasulu Setty
So our assumptions are broadly the following. One is, you’re right, I think more than the further rate cuts, we are building our model based on the repricing. As the book gets repriced, that benefit will be available, both on the savings bank and as well as fixed deposits, right? The second thing also considers the CRR cut, almost INR52,000 crores get released which is not currently earning anything, right? So that will also add to the NIM. And we believe that the policy decision of not cutting further rates have established that the retail segment, the rates will be stabilizing on the asset side. So all these elements give us confidence that the NIM trajectory is what we have assumed.
Piran Engineer
Understood. Thank you, sir, and wish you all the best.
Challa Sreenivasulu Setty
Thank you.
Anand Dama
Sir, this is Anand Dama from Emkay Global over here. Sir, you said that there will be a release of about INR52,000 crores from CRR. We have INR25,000-odd crores coming from capital side. Do you believe that the 12% growth that we have now at this point of time can become 13%? Hopefully, mortgages also should see a pickup in the second half of the year with the rates coming off, though we are not seeing at this point of time any signs. What is your view on the overall growth and particularly the mortgage growth, if you can share?
Challa Sreenivasulu Setty
So the liquidity and capital has never been a constraint. See even earlier also, we had adequate CRAR to support the credit growth. While this INR25,000 crores definitely has augmented our capital, it was — as we mentioned earlier also, it was mainly for confidence capital or improving our CET1. So need not be linked to our ability to fund growth. The growth capability was always there. In terms of the liquidity, again, we had one of the lowest CD ratios, and we — excess SLR of almost INR3.5 lakh crores.
So these are not going to really move the needle. This is not about supply issue ever for us. It was always in terms of what demand is coming in the market. That’s the reason we are still sticking to 12%. And as the uncertainties get cleared, probably there is a potential upside of 13%.
Anand Dama
Okay. So that is helpful. And on mortgages, if you can just share some info because we’re not seeing any pickup on the ground as of now despite the rate cuts, which have happened.
Challa Sreenivasulu Setty
You see a 15% growth rate in home loan.
Anand Dama
Yeah, that is for us. But otherwise, when we speak to a lot of other players, they’re saying that…
Challa Sreenivasulu Setty
I don’t know. I think that — at least we are seeing that good amount of sourcing of applications, sanctions, disbursements. And we probably have historically high level of sourcing going on now as we speak.
Anand Dama
Sure. And sir, secondly, do you expect that the ECL norms will come this year now?
Challa Sreenivasulu Setty
ECL?
Anand Dama
Yeah.
Challa Sreenivasulu Setty
No idea on that. Thank you.
Anand Dama
Thank you.
Kunal Shah
Yeah. Sir, Kunal Shah here from Citigroup. So firstly, on Xpress Credit, so we have been very comfortable with less than 1% NPA over there. Now it’s gone up to almost 1.2% and that to on a flat book. So where do we see eventually GNPAs in Xpress Credit stabilizing? Do we see further inch up the way it has been like last four, five quarters or most of it is now recognized?
Challa Sreenivasulu Setty
So the absolute number has not moved much. It’s only the base effect because it’s almost stagnant. The book is at the same level. That is actually resulting in the uptick. We don’t see major concern in terms of the asset quality in Xpress Credit. We may still have some pullback happening on that.
Kunal Shah
Okay. And if you can share AFS reserves number, so that would help. Yeah.
Challa Sreenivasulu Setty
Do we have AFS reserves number?
Unidentified Speaker
Yeah.
Saloni Narayan
INR7,700 crores.
Kunal Shah
Last time, it was INR6,600 crores.
Saloni Narayan
We have added…
Challa Sreenivasulu Setty
Some accretion is there.
Pawan Kedia
We have a few questions coming in through the online webcast now. These will be addressed by the Chairman sir now. Sir?
Challa Sreenivasulu Setty
The first question is from M.B. Mahesh from Kotak. If you could give us the income from written-off accounts.
Q1 FY’26, INR1,229 crores. I think it’s mentioned in the presentation. Q1 of FY’25, it is INR1,008.
Kiran Shah, can you please give the breakup of percentage of your loan mix in terms of based on external benchmark like repo, others and fixed rates?
Our MCLR book is 30.69%, EBLR is 30.24%. Fixed rate is 22.58% and others, which includes T-bill-linked pricing of 15.93%.
Saurabh Kumar, what is quantum of IT refund in last Q4 FY ’25 and this quarter?
This quarter, we didn’t have any IT refund. IT refund in Q4 was INR1,319 crores and the IT refund in the corresponding period last year was also nil.
Armaan Nahar from Blue Sky Fintech. Do you think pain in unsecured segment, MFI have come to an end?
I think we never had any issues in our unsecured book as well as we — our MFI exposure is miniscule. But we believe that from a system point of view, there is definitely an improvement in the asset quality in the unsecured loan and MFI segment, while a lot of upfronting in terms of cleaning up the book by MFIs is also one of the reasons why we believe that situation is better now.
Deepanshu, how QIP funds will be used in future?
As I mentioned, it is not in terms of growth capital. It is definitely as to augment our CET1. So today, after this capital raise, the bank assets — the available buffer is 233 basis points over minimum regulatory capital. So we believe that this supports adequately our growth plans.
Vishal Gutka from ASK Investment Managers, what is driving such sharp increase in current account balances, given other peer banks are grappling to collect current account balances?
So the current account growth has come from both government and nongovernment accounts. We’re definitely focused on many initiatives such as creation of specialized hubs and deployment of dedicated workforce. Relationship manager for current account also are there to look specifically into it. But more than the quarter end balances, what we are witnessing to our pleasant surprise is the quarter-on-quarter improvement in the daily average balances in the current account.
Chintan Joshi, can you give us color on what your weighted average savings deposit cost?
The average weighted average cost of saving bank deposit as on June ’25 is 2.68%.
Radhika Kantikar from HDFC ERGO, what is the outlook for slippages?
We had slippages of INR7,945 crores Q1 FY’26, out of which there has been some pullback. So we are still sticking to our slippage ratio to contain the slippages below 0.6%.
Rohan Mandora from Equirus. Why did your cost of deposit increase during the quarter? Also, what is the share of bulk deposits?
I already explained that the CASA ratio decline as well as TD significantly increasing has contributed to the cost increase, but we expect it to moderate. And normally, we don’t disclose the bulk deposit-related data.
Rohan Mandora again, what is driving growth in SME segment? Is it largely working capital demand? Any signs of initial stress that we may be seeing in the SME portfolio? And our asset quality in Xpress Credit has held up well, but we have slowed down the growth in that segment. Is there a lack of good quality demand?
I think both these questions I’ve answered. I don’t want to repeat again.
Sukrit D. Patil, as SBI continues to scale its digital banking footprint, how are you envisioning the integration of AI-led underwriting and behavioral risk scoring across YONO and SME platform in the next quarters.
As we continue enabling our digital document execution for the BRE and non-BRE journeys under LMS, that is loan management system, we also have auto renewal journey on the BRE loans, integration of vendor verification module and many things what we are using AI also will be there. As I mentioned, AI stack is something which we are setting up. So this would help us. Underwriting BRE is essentially using the machine learning models, and we probably utilize AI to set the patterns.
Today, we are using predictive AI models. We also intend to use the GenAI models going forward. And with customer migration to the alternate channel, end-to-end digital channel products will be launched. I think this is broadly the questions from the calls. Thank you very much.
Pawan Kedia
I trust all the questions have been addressed. We’ll be happy to respond to other questions in offline mode. Let me end the evening with thanking Chairman sir, MD sirs, DMD Madam, top management team, analysts, investors, ladies and gentlemen, we thank you all for taking time out of your schedule and joining us for this event.
To round off this evening, we request you all present here to join us for high tea, which is arranged just outside this hall. Thank you. Thank you so much.